CHICAGO -- With out-of-stocks at the retail level showing very little improvement over the past decade, a research group that reported on OOS in 2002 is gearing up for a new study aimed at finally putting a dent in the problem.
The 12-week study, set to begin this month, continues work started last October by the group, which includes Daniel Corsten, professor, Kuehen-Institute for Logistics, University of St. Gallen, Switzerland, and Tom Gruen, professor of marketing and e-commerce, University of Colorado.
Corsten and Gruen announced their plans here at the Retail Systems Conference and Exposition, held May 24 to 26 at McCormick Place, during a session titled "Increase On-Shelf Availability by Reducing Out-of-Stocks." They were joined at the session by J.P. Brackman, global retail presence manager, Proctor & Gamble, which funded the 2002 study and will finance the new study. Brackman will contribute to the new study.
"About five years ago, P&G approached us and let us know that out-of-stocks were a big problem," said Corsten. "We completed a study in 2002 that found that worldwide, out-of-stocks were at about 8%. In the time since, that number hasn't really changed much." P&G still gets 10,000 calls a day from customers complaining that they couldn't find a certain item, said Brackman.
The 2002 study -- "Retail Out-of-Stocks: A Worldwide Examination of Extent, Causes, and Consumer Responses" -- was authored by Corsten, Gruen and Sundar Bharadwaj from Emory University, with input from Brackman, under the auspices of Food Marketing Institute, Grocery Manufacturers of America and CIES.
The study reported that the average OOS rate was 7.9% in the U.S. and 8.6% in Europe. Those numbers were only slightly better than those reported in 1996 by the Coca-Cola Research Council. Because the numbers have not improved, "we feel like we need to move [the industry] forward," Brackman said.
Corsten attributed the poor progress largely to in-store process complexities, including the proliferation of stockkeeping units and promotions, and poor execution of store-level assortment and planogramming systems.
The new study, called "Out-of-Stock Attenuation: Linking the Root Causes of Retail Out-of-Stocks to Sustainable Solutions that Increase On-Shelf Availability of Fast-Moving Consumer Goods," aims to go beyond the "understanding" gained in the first study by finding actionable steps retailers can take at the store level to prevent OOS.
"Rather than looking upstream into the supply chain, we're focusing on retail processes," said Gruen. "Quite frankly, in the research we've done, we've found 99% availability at the [distribution center] almost all the time. Most of the opportunity [for OOS prevention] is available in the retail processes."
The new study will look at four solutions: forecasting, shelf-space management, item management and inventory accuracy. It will also look at four root causes: optimal assortment, data accuracy, supply management and employee management. "The key with these studies is to know which factors have the highest effects on OOS and in what context," said Gruen.
"We're working with two retailers and each will cover two studies each, so we have four studies covered so far," said Brackman. The group is currently soliciting retailer participation in the other studies. Core categories will include feminine care, diapers, detergent and hair care items.
To participate, retailers must provide transactional-level point-of-sale data and dedicate a number of test and control stores.